Apple supplier Foxconn starts to see slowing smartphone sales

The popularity of iPhones has endured among a loyal and relatively affluent customer base.

Apple iPhone assembler Foxconn gave a cautious outlook for the current quarter after posting results that exceeded expectations, citing slowing smartphone demand after a pandemic-fuelled boom.

The comments from the Taiwanese company — the world's largest contract electronics maker — echo those from other Asian tech firms that have warned of a drop in sales of smartphones, TVs, and gadgets as surging inflation and deepening concerns of a recession crimp on consumer spending.

Foxconn has been largely shielded from these demand problems so far, as the popularity of iPhones has endured among a loyal and relatively affluent customer base, and it said that rising inflation will only have a limited impact on mid- to high-end smartphone demand in the rest of the year.

Still, Foxconn forecast flat revenue growth in its consumer electronics business, including smartphones, for the quarter ending September, signalling that demand for some devices was slowing after "significant growth" in the second quarter, when the business accounted for half of its overall revenue.

"On the whole, we are slightly more cautious about the third quarter, but compared to the same period last year, we could still see growth," company chairman Liu Young-way told a post-earnings call. 

We will closely watch developments in geopolitics, inflation, and the pandemic."

Like other global manufacturers, Foxconn, formally called Hon Hai Precision Industry Co, has dealt with a severe shortage of chips that hurt production as bottlenecks from the pandemic lingered and the Russian invasion of Ukraine further strained logistical channels.

The company said the second half of the year would look better than the first if there were no major geopolitical changes.

Both Foxconn's net profit and revenue for the April-June quarter rose 12%, and Liu said the numbers show its "resilience" amid supply chain problems.

"Our customers, and ourselves, we are all large global technology companies, and have relatively strong supply chain management abilities," said Mr Liu. 

This advantage allows us to minimise the impact of any materials shortages."

Foxconn said it anticipates revenues for cloud and networking products to be strong in the third quarter. 

It reaffirmed its stance from last month that overall revenue this year will grow, rather than a previous guidance of remaining flat. It did not provide a numerical outlook.

Reuters